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Do Social Entrepreneurship and System Change follow the same principles?

This is the latest blog update from the Skoll Centre’s main research initiative, the Systems Change Observatory.

Many organisations, platforms and coalitions have reported examples of systems change in action. These include the Finance Innovation Lab, Future of fish and EYElliance. However, these organisations do not fit into the model of for-profit social entrepreneurship. Their approach is cross-disciplinary, with a focus on collaborative action and building coalitions of actors from each system they intend to change.

“While implementing a solution inordinately changes systems, the approach to the programme design and its guiding principles are a key differentiator.”

– Systems thinking educator working with a Foundation, USA

In our last post, we discussed the distinctions and overlaps between shifting systems and scaling a solution. This includes focusing on root cause analysis and shifting a system permanently in the long-term. From these discussions another thread emerged – differences in the principles which underline social entrepreneurship and systems change. Although the terms can overlap, there are a few distinctions to note. These include:

Scaling impact vs. problem solving

As a social entrepreneur, there is a tension between growing an organisation’s impact and working to solve a problem.  Our contributors noted a difference in working at the system level and at the enterprise level. One of our contributors emphasised that as a ‘systems entrepreneur’, they spun out of a social venture to not just grow one organisation’s impact but solve the population-level problem.  When engaging in systems change, work must be focused on analysing and mapping the system with the intention to create systemic change.

“Should you grow impact or solve a problem in its entirety or both? [We are] bridging the gap between social entrepreneurship and systems change.”

– Social entrepreneur running a multi-sector coalition, USA

Role in the Ecosystem

Social entrepreneurship fulfills a different role in the ecosystem as well. The focus is typically on a specific venture or organization, while systems entrepreneurship is more likely to focus on making connections between different elements of a system to address the target problem.

“…you sit in a different place in the ecosystem. One of the benefits of that is we have very different conversation with institutions like WHO, USAID, Game changing conversations”

– Social entrepreneur working in the technology sector, India

Conflict of Interest

Our contributors noted that there is a tension between creating returns for investors and taking systemic approaches that require collaborative action. This implies that a lot of systemic interventions fall outside the scope of for-profit social enterprises that are in-turn responsible to their shareholders. Spending time away from the business also has a disconnect with funders and investors.

“In the marketplace you are trying to win, building the ecosystem is a tension as a for-profit company.”

– Social entrepreneur working in the technology sector, Zambia

Capacity

Another driver of systems change is capacity. An organisation has to be structured to achieve systems change and cannot achieve this if it decides to create systems change partway through fragmented approaches and interventions due to the factors listed above.

Commonalities

Our contributors also shared some common principles between system change and social entrepreneurship. These include:

  • Experimentation: While vision and mission setting are extremely important to know what change an organisation wants to achieve, the process is also constantly evolving as approaches and market segments are tested and flexed. As you engage in both activities, you often encounter roadblocks that you did not expect, and you create new ways to navigate around them.
  • Building on your Expertise: While trying to shift the system in multiple ways, entrepreneurs identify approaches that are well outside of their capacity. Instead, they develop a theory of change and target the problem indirectly with an approach that fits their expertise.
  • Complexity: The complexity of the system at play can be different for different businesses and target problems. Some cases require policy change and collaboration with the public sector, while some are more focused on changing how information is shared in the system. For each of these cases, you have to create the right tools fit for the purpose.

As we can see, there are several distinctions and overlaps in the principles defining social entrepreneurship and systems change. For-profit social entrepreneurship traditionally focuses on an organisation and its impact, while a venture that intends to create systems change follows a more collaborative approach to change and holds a different power dynamic with actors in the system.


Author(s): Nikhil Dugal is a systems change consultant with the Skoll Centre for Social Entrepreneurship. He is a Skoll Scholar, having completed his MBA at Saïd Business School in 2018.

on 22nd June
Pandemics within a Pandemic

Tsechu Dolma is a current 2019-20 Skoll Scholar on the Oxford MBA. In this blog, Tsechu reflects on the last three months of the current situation. Sharing her lived experience growing up and how COVID-19 has exposed an already existing pandemic – systemic racial injustice.

My homecoming has been beleaguered with grief, anger, heartbreak, angst, exhaustion, and hope.

Ten weeks ago, as in-person classes suspended, borders shut down, and toilet paper ran out, I scurried out of Oxford and sought my mother’s warm embrace in Queens, New York. Little did I know then that I was stepping into one of the hardest-hit communities in the world, and the COVID-19 pandemic was exacerbating already existing pandemics.

This pandemic has exposed stark disparities in my beloved city as minorities are more likely to lose their job and die due to systemic racial inequality. Many states are reopening, and we are still seeing low-income areas and communities of color being hit the hardest in transmission rates. Death has been imminent, and disease prevalent in my neighborhood; we are the city’s working-class borough of immigrants. We all ended up here because we were escaping civil war, religious persecution, Jim Crow South, among others, and building our ethnic enclaves for security and economic mobility. Everything has felt so out of our control in the last three months.

My community and inner cities across the country are burning today, protesting the use of excessive force with perceived impunity on people of color by police officers nationwide; George Floyd, Breonna Taylor, Ahmaud Arbery, these are just recent names added to a list of countless horrifying racist killings. I have been participating in the peaceful Black Lives Matter protests, and I have never once felt in danger or seen violence in these demonstrations. However, being a brown girl growing up in post-9/11 New York on refugee status, I have always been afraid of law enforcement. Every morning, starting in sixth grade, my classmates and I would line up for an hour waiting to pass through the metal detectors to get to classes. We had a police officer for every thirty students. What does this do to black and brown children’s psyche when you have armed police in your cafeteria, classrooms, and playground? We had very little margin of error. More of my classmates ended up in the prison system than in four-year colleges.

Crowd of people peacefully protesting, holding cardboard banners stating 'No Justice, No Peace'

Colonization, white supremacy has been around for centuries. Today, I am emboldened by demonstrations around the world. We need to sustain this movement with staying power to reimagine systemic and structural racial justice work radically. Currently, most of the funding does not go into black and brown communities. Every $1 a white-led organization raises, a black-led organization will raise only $0.24.

I leave you with this quote from Howard Thurman, Black-American educator, and civil rights activist,

All around us worlds are dying and new worlds are being born; all around us life is dying and life is being born; It is the extra breath from the exhausted lung, the one more thing to try when all else has failed, the upward reach of life when weariness closes in upon all endeavor. This is the basis of hope in moments of despair, the incentive to carry on when times are out of joint, and men have lost their reason, the source of confidence when worlds crash and dreams whiten into ash. The birth of a child — life’s most dramatic answer to death — this is the growing edge incarnate. Look well to the growing edge!”.

As our MBA program is coming to an end from a distance, and we step into our business and management leadership positions, I encourage my classmates to look well to the growing edge and be better allies. I will be using my Skoll Scholarship to fight racial injustice in the American inner-cities. We all have to do this work collectively. We need to prioritize supporting leaders with lived experience, leadership, and communities of Black people.

Author: Tsechu Dolma, 2019-20 Skoll Scholar and Oxford MBA.

on 12th June
Diversity, Equality and Inclusion in Impact Investment

Tara Sabre Collier, Social Entrepreneur in Residence at the Skoll Centre for Social Entrepreneurship and Skoll Scholar alumna joins Chris Blues, Programme Manager for Social Ventures at the Skoll Centre, in examining inequalities within the Impact Investment industry.

Inequality is one of the greatest challenges of our time, hampering growth, spurring strife and instability and impeding human development.

Income inequality has been worsening across countries since the turn of the century and is likely to be tremendously exacerbated by COVID-19. The impact investment sector has been a powerful force for progress towards many SDGs but needs to take a critical look at how, as a sector, it is advancing or exacerbating SDG 10. In most of the world, income and wealth inequality are inextricably tied to race, ethnicity, gender, national/origin migration status but most impact investors have not fully interrogated their roles in fostering equity and inclusion across their organizations and portfolios.

There is no aggregate global diversity and inclusion data for the impact investment industry.

Data from the UK, one of the world’s leading countries for impact investment, show a clear discrepancy in the ecosystem, with people of colour occupying less than 7% and women outnumbered 2:1 in board directorships. While the UK does not necessarily represent the entire impact investment industry, it is an important global hub. Moreover, there are a number of global commonalities in terms of wealth distribution, private capital markets and philanthropy that indicate other Western impact investment markets will similarly fall short. The impact investment industry hybridises investment, philanthropy, and social enterprise traits; talent, staffing and leadership trends will reflect this DNA. A few global highlights from these sectors (across UK and USA) reveal less than admirable diversity and inclusion track record.

Venture Capital

The United States is the world’s leading VC market. White men are 30% of the country’s population yet nearly 80% of VCs and 80-90% of leadership in venture-backed companies. This demographic disparity, is replicated in the European VC ecosystem. Furthermore, research shows that venture capitalists are far more likely to partner with people who share their gender or race, leading to far less funding for women entrepreneurs and founders of colour.

Philanthropy

Women are about 56% of US philanthropic foundations CEOs, but people of colour only occupy 11% of said roles, despite a significant philanthropic emphasis on serving communities of colour in the US. There’s now evidence that this disparity is reflected in philanthropic funding for social entrepreneurs of colour, with a recent Bridgespan study showing Black-led social enterprises have 76% smaller net assets than white-led counterparts, mostly attributed to bias.

Social sector

Just 3% of UK charity CEOs were of non-white backgrounds, despite the fact that a large share of the UK sector’s work likewise addresses communities of colour. On the international front, an older study indicated less than 10% of the largest international NGOs had African board members, despite Africa being the largest market for INGO grant funding and programs.  Likewise, despite women comprising 70% of INGO staff, women are still vastly under-represented (i.e. approximately 30%) as CEOs and leaders of these organizations.

These select examples demonstrate a pattern of diversity paucity which contravenes the vision of impact investing.

Two painted multicoloured hands, holding hands

If the impact investing industry replicates these disparities, there is a risk of reinforcing income inequality, instead of combatting it.

The representation gap also points to a possible market failure whereby impact capital is likely not being efficiently distributed to many promising ventures with potential to solve societal challenges because of a disconnect between primarily Western white male funders and under-represented social enterprise founders, especially in the Global South. Furthermore, the lack of representation in impact investment teams and portfolios would likely detract from the sector’s financial performance, given the proven linkages between gender/racial diversity and financial performance. There’s no dearth of evidence for the commercial benefits of representation but nevertheless a handful are mentioned below:

While the corporate sector continues to rise to the occasion on diversity and inclusion efforts, the impact investment industry is yet to get on board with really advancing the inclusion agenda beyond gender. In the face of what we are learning from the COVID-19 pandemic, there is no time like now to decidedly develop diversity and inclusion initiatives that will improve financial/social returns. If impact investors are truly serious about the SDGs, including SDG 10, we must fight the hazards of inequality, starting with our own industry.

Authors:
Chris Blues, Programme Manager for Social Ventures, Skoll Centre for Social Entrepreneurship

Tara Sabre-Collier, Social Entrepreneur in Residence, Skoll Centre for Social Entrepreneurship

on 9th June

About this group

Dear all,

In early October this page will be migrated to the new Oxford Business Alumni website’s Groups section, and this group will merge with the "Oxford Business Network for Social Impact". This is to ensure better integration with the OBA Directory, reduced number of login details for members to keep track of, and a simpler way for students and alumni to interact with each other.

Therefore, please do not request membership to this page, but rather register for the new OBA website (https://www.alumniweb.ox.ac.uk/obasecure/page.aspx?pid=1820) if you have not already done so since July 2012. Once your registration is processed, you may join an Oxford Business Network as well as Chapters and events with the same login details. Please note, in early October we will be sending all 2012-2013 degree programme students their alumni number to register. Any other alumni requiring their Alumni Number for registration please email us at alumni@sbs.ox.ac.uk.

We will update you once the new page is available. We appreciate your understanding and look forward to seeing you on the new OBA website!

Best regards,

Alumni Relations Office

Saïd Business School, University of Oxford

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

What is impact investing?
How do you measure social and financial returns?
Can you pursue social and financial returns simultaneously?

Welcome to the Social Finance Oxford Business Network!
Led by current MBA students at the Saïd Business School, we exist to consider these and other questions surrounding the emerging field of impact investing. Our goal is active collaboration between Oxford students, alumni and others with interest in Social Finance and Impact Investing.

We are committed to bridging the gap between finance and social enterprise by: - Deepening our knowledge of social finance and impact investing developments - Building networks & relationships in the industry - Pursuing career opportunities

  Contact the manager of this GroupSpaces group
Category: Other
Networks: Oxford University, Saïd Business School

News & Announcements

Oxford Business Network pages are changing!

Posted by Ladd Thurston, Monday, 1st October 2012 @ 1:32pm

  • Dear all,

    In early October this page will be migrated to the new Oxford Business Alumni website’s Groups section, and this group will merge with the "Oxford Business Network for Social Impact". This is to ensure better integration with the OBA Directory, reduced number of login details for members to keep track of, and a simpler way for students and alumni to interact with each other.

    Therefore, please do not request membership to this page, but rather register for the new OBA website (https://www.alumniweb.ox.ac.uk/obasecure/page.aspx?pid=1820) if you have not already done so since July 2012. Once your registration is processed, you may join an Oxford Business Network as well as Chapters and events with the same login details. Please note, in early October we will be sending all 2012-2013 degree programme students their alumni number to register. Any other alumni requiring their Alumni Number for registration please email us at alumni@sbs.ox.ac.uk.

    We will update you once the new page is available. We appreciate your understanding and look forward to seeing you on the new OBA website!

    Best regards,

    Alumni Relations Office

    Saïd Business School, University of Oxford

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The Impact Generation March Happy Hour: Marmanie Consulting

  • Wednesday, 14th March 2012 at 7:30pm
    Location: The exchange, london bridge

    Sign up…

SVCIC Debrief: Feedback and Insights

  • Friday, 24th February 2012 at 5:30pm - 6:30pm
    Location: TBA

    Want to gain insights into what it takes to succeed in sustainable venture capital? 

    • 1 person attended

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